January 15, 2012

The rise of the creative class by Richard Florida

The rise of the creative class by Richard Florida
and how it is transforming wok, leisure, community and everyday life.

[We are transforming from knowledge based economy to creative class based economy; talk about who are the creative class and their impact to our society and how can we create environment for alluring them for economic prosperity – another scholarly book]

Take a typical man on the street from the year 1900 and drop him into 1950s. The take someone from 1950s and drop him to present day. Who would experience the greater change?

There are two ways to see this puzzle. A person from the turn of the 20th century would be awestruck by a world filled with baffling technological wonders. He will see biggest wonder not only on the streets, but also at home too. The second person will not see that many wonders as the first one in the space of technology advancement. But when we try to see it from social and cultural world, we shall find that the first person would not find big difference and the second person will see biggest surprise (dress code, women in the working class, reality shows, social networking where people share private memories to unknown friends, trust unknown person compared to his/her neighbor.

What caused this transformation? The logic behind the transformation has been unclear to this point because the transformation is still in progress. But lately a number of diverse and seemingly unconnected threads are starting to come together. That driving force is the rise of human creativity as they key factor in our economy and society. Both at work and in other sphere of our lives, we value creativity more highly than ever and cultivate it more intensely.

Creativity is multinational and comes in many mutually reinforcing forms. Max Webber said long ago that the Protestant ethic provided the underlying spirit of thrift, hard work and efficiency that motivated the rise of early capitalism. In similar fashion, the shared commitments to the creative spirit in its many, a varied manifestation underpins the new creative ethos that powers our age.

In the new world, it is no longer the organizations we work for, churches, neighborhoods or even families that define us. Instead, we do these ourselves, defining our identities along the varied dimensions of our creativity. We often tend to classify people on the basis of their consumption habits or lifestyle choices or more crudely by their income level. A class is a cluster of people who have common interests are fundamentally determined by economic function by the kind of work they do for a living.

George Gilder describes the internet will make customer as the product and product is the customer and both server one another, in a rhythm of creativity between producers and users, a resonance of buyers and sellers in which the buyers also sell and sellers also buy in widening web of commerce. The resonance is wealth and the light and there is no impedance in the middle.

Creativity is not just intelligence - the ability to deal with or process large amounts of data - favors creative potential, it is not synonymous with creativity. Paul Romer has argued that the most important ideas of all are meta-ideas which are ideas about how to support the production and transmission of other ideas. Taken together, following three things will bring social structure of creativity,.
1. New systems for technological creativity and entrepreneurship
2. New and more effective models for producing goods and service
3. A broad social cultural and geographic milieu conductive to creativity of all sorts.

The creative class has three values in common
1. Individuality - The members of the creative class exhibit a strong preference for individuality and self-statement. They don’t want to conform to organizational directives and resist traditional group oriented norms
2. Meritocracy - Merit is strongly valued by creative class; they favor hard work, challenge stimulation. Its members have a propensity for goal-setting and achievement.
3. Diversity and Openness - The favor organization and environment in which they feel that anyone can fit in and can get ahead.

The Nobel prize-winning economist Robert Fogel says “Today’s people are increasingly concerned with what life is all about. That was not true for the ordinary individual in 1800s when nearly the whole day was devoted to earning the food, clothing and shelter needed to sustain life”. We live differently and pursue new lifestyles because we see ourselves as a new kind of person. We are more tolerant and liberal both because our material conditions allow it and because the new creative age tells us to be so.

Money is the only thing the creative class wants and following are observed.
1. Yes, people want enough money to live in the manner they prefer
2. Even if earning enough to pay the bills, they will be unhappy if they feel they are being paid what they are worth as gauged
3. But while the absence of enough money is sufficient, to make them happy with their work, money alone will not make most workers happy or committed or motivated.

Following are top ten highly valued job factors from information week’s survey.
1. Challenge and responsibility
2. Flexibility
3. A stable work environment and a relatively secure job
4. Compensation
5. Professional development
6.Peer recognition
7. Stimulating colleagues and managers
8. Exciting job content
9. Org culture
10. Location and community

The new labor market shaped by these trends has three chief characteristics.
1. People today tend to pursue their careers horizontally rather than vertically. Climbing the corporate ladder is no longer so popular. Perhaps because there is not as much of a ladder in many of today’s leaner, flatter firms - and it is liable to shift or vanish before you are halfway up. Instead more of us swing from tree to tree in search of various fruit.

2. People have come to identify more with their occupation or profession than with a company. This is partly the product of the move to domain-specific knowledge. In search of greater challenge, autonomy or satisfaction, people once again tend to move horizontally rather than vertically.
3. People bear more responsibility for every aspect of their careers. We not only assume the risks of our jobs move, we assume the task of taking care of our creativity - investing in it, supporting it and nurturing it. They go through basic port-of-entry education, education for a career-track change and ongoing learning and upgrading of skills. Skill acquisition has become an individual responsibility., both because the interactive nature of computer tools allows new media workers to learn new skills as their own pace and within their own learning styles and because formal learning programs have not kept pace with skills needs in this fast changing industry.

Peter Drucker writes,” What motivates knowledge workers is what motivates volunteers. Volunteers have to get more satisfaction from their work than paid employees precisely because they do not get a paycheck”. The commitment of creative people is highly contingent and their motivation comes largely from within.

In the creative economy, time is the only nonrenewable resources. The three big factors driving this economy, along with the need for creativity, are the prevalence of change, the need for flexibility and the importance of speed. Paul Romer writes, “Our children will have more of almost everything, with one glaring exception: They won’t have more time in the day. As income and wages increase, the cost of time will continue to grow and so will the sense that time is scarce and that life proceeds at a faster pace than in the past.”

(Considering the value of time, if Bill Gates drops $10,000 bill , it is small bill for Bill to bother with The time that he needs to spend (4 sec) to pick it up from the floor, is more than $10,000 considering his wealth.)

Steve Tomlinson captured the whole dynamic perfectly in a satiric monologue titled Perfect Pitch.

Following is from the ‘Perfect Pitch”.
We can divide the market into three segments
1. People with passion who believe that they on mission from God believe in what they are doing because they love it
2. People with drive - Greedy people - chasing the herd from one gold rush to another, trampling each other on the way.
3. Reasonable people - people with passion and drive. Here is a guy who starts with passion (idea) and he believes it is cool and hoping that other people will like it - so he starts a little business and sure enough some people want it. So the business grows and that means more people and investors and the market. And when the herd gets involved - cool is not enough,. It is got to be hot. It’s got to be the next big thing. And so our guy with a cool idea is suddenly riding the buzz of the next big, hot, scalable thing and people he has seen in magazine are talking to him - promising fame and more money than he and his family could ever spend. So he is ready to sacrifice and we offer him stock in deferred-life and make a rational calculation and as long as his upside fantasy covers the costs, he buys in - he outsources his fulfillment and he shifts form cool to hot. his vital signs follow the NASDAQ, his vision clouds and before long he is making bets with his life that even the craziest VCs would not touch. So we focus our efforts right here. On this calculation, ignore the bears. We simply put the costs and benefits in perspective and the customer sees that he needs us now more than ever. ..

Deepening the moment: If one cannot elongate time, perhaps one can deepen or intensify it, getting more from each bit. To me this is the key difference in our use of time and it can be more insidious than long hours. In ‘Time for Life’ Robinson and Godbey suggests that there are four basic strategies for time deepening.

1. The speeding up of activities
2. Substituting a leisure activity that can be done more quickly for one that takes longer, such as getting take-out or home delivery rather than cooking, playing racquetball rather than a slower game like tennis - or in my case, an hour of spinning in the gym as opposed to two or three hour bike ride with friends
3. Multitasking or doing more than one thing at once. Watching TV while reading news paper, using cell phone while driving etc
4. Detailed time planning and budgeting - esp. for leisure or recreational activiti4s,: compartmentalizing time so as to get a handle on it. What astounds me more than anything is that my students now carry personal organizers with their days parceled into half-hour chunks.

In general, write Robinson and Godbey, we are shifting from the consumption of good to the consumption of experience. In their insightful book ‘The experience economy, Joseph Pine and James Gilmore observe that consumers are coming to favor the consumption of experience over traditional goods and service.

“Experience is a fourth economic offering, as distinct from service as services are from goods. While commodities are fungible, goods tangible and services intangible, experience are memorable. The Nobel Prize-winning economic historian Robert Fogel sums up the situation this way: “Today ordinary people wish to use their liberated time to buy those amenities of life that only the rich could afford in abundance a century ago... The principle cost off these activities is not measured by cash outlays, but outlays of time”. And with the life having become the scarce and precious commodity, many increasingly define the quality of their lives by the quality of experience they consume.

A new resolution of the centuries old tension between two value systems: protestant work ethics and the bohemian ethic. Protestant ethic says meaning is to be found in hard work and the bohemian ethic is more hedonistic. It says value is to be found in pleasure and happiness - not necessarily in gross indulgence or gluttonous excess, but in experiencing and appreciating what life has to offer.

Bohemian ethic came to signify everything the protestant work ethic was not.

Creative community: How do we decide where to live and work? What really matters to us in making this kind of decision? How ahs this changed? And why? A number of consistent themes emerges from my research:

1. The creative class is moving away from traditional corporate communities to a set of place I call creative centers
2. The creative centers tend to be the economic winners of our age. They also show strong signs of overall regional vitality such as increases in regional employment and population
3. The creative centers are not thriving for such traditional economic reasons as access to natural resources or transportation routes. Creative centers provide the integrated eco-system or habitat where all forms of creativity - artistic, and cultural, technological and economic - can take root and flourish
4. Creative people are not moving to these places for traditional reasons. What they look for in communities are abundant high-quality amenities and experiences, an openness to diversity of all kinds and above all else the opportunity to validate their identities as creative people.

Creative capital theory says that regional economic growth is driven by the location choice of creative people who prefers places that are diverse, tolerant and open to new ideas. It thus differs from the human capital theory into two respects.

1. It identifies a type of human capital, creative people as being key to economic growth
2. It identifies the underlying factors that shape the location decisions of these people, instead of merely saying that regions are blessed with certain endowments of them.

Great city has two hallmarks: tolerance for strangers and intolerance for mediocrity - These are precisely the qualities that appeal to members of creative class. Places are also valued for authenticity and uniqueness. Authenticity comes from several aspects of a community - historic building, established neighborhoods, a unique music scene or special cultural attributes. Music is a key part of what makes a place authentic. Music in facts plays a central role in the creation of identity and the formation of real communities. Sounds, songs and musical memories are some of the strongest and most easily evoked.

Cities are now favorite for the people for the following reasons

1. Crime is down and cities are safer

2. Cities have become the prime location for the creative lifestyle and the new amenities that go with it.

3. Cities are benefiting from powerful demographic shifts (more people staying singles than married)and urban centers server lifestyle centers and as mating markets for single people

4. Cities have reemerged as centers of creativity and incubators of innovation

5. The current round of urban revitalization is giving rise to serious tensions between established neighborhood residents and newer more affluent people moving in

6. Both sprawling cities and traditional suburbs are seeking to emulate elements of urban life.

Place provides an increasingly important dimension of our identity. The combination of where we live and what we do has come to replace who we work for as a main element of identity. Qualities of the place are defined by these three KPIs.

1. What is there
2. Who is there
3. What is going on

One of the great remaining puzzle of urban economic and regional analysis resolved around Zipf’s law and that says that the distribution of virtually all cities within a nation follows a simple ‘power law’: the basic idea being that the second largest city is roughly half the size of the largest; the third roughly one-third of the size and so on. This law accurately describes all the other advanced industrial nations.

While the university is a key institution of the creative economy, to be effective contributor to regional growth, the university must play three interrelated roles that reflect the 3Ts of creative places - technology, talent and tolerance.

The challenge before the creative class is a toll order. Mancur Olson noted in his classic book ‘The logic of collective action’, those who organize around discrete goals with sustained effort have a great advantage over those who have strong interests but are diffuse and disorganized. The creative class in my view has three fundamental issues to address
1. Investing in creativity to ensure long-run economic growth
2. Overcoming the class divides that weaken our social fabric and threaten economic well-being
3. Building new forms of social cohesion in a world defined by increasing diversity and beset by growing fragmentation.

Book referred in this book
Organization man - William Whyte & Jabe Jacobs
Capitalism, Socialism and Democracy - Joseph Schumpeter.
The social life of information by John Seely Brown and Paul Duguid
The Death and life of Great American Cities - Jane Jacob
Guns, Germs and Steel by Jared Diamond
the wealth of Nations by Adam Smith
The experience economy by Jospeh Pine and James Gilmore
Bohemian versus Bourgeois by Cesar Grana.
One market under God by Frank Bemoans
The logic of collective action by Mancur Olson

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